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Old is Gold

Refurbished heritage properties in Jalan Lau Ek Ching in Ipoh. One is for sale at RM2mil.

What price is one willing to pay to own a piece of history?

According to valuation surveyor and property consultant Choo Ah Sit, sources have revealed that the former OCBC Bank building on Lorong Hang Jebat in Malacca has been attracting attention from foreign buyers. Some Singaporeans are said to have offered between RM22mil and RM25mil for the property.

However, since foreign buyers are required to obtain approval from the state’s Foreign Investment Committee, which can be a time-consuming process, the owners have offered the early mordernist style building to a local company for RM17.5mil.

The total land area for the five lots covers some 7,739 sq ft with a 3½-storey building with a total built-up area of about 23,500sq ft. Crunching the numbers, if the offer of RM17.5mil goes through, the price of the property works out to RM2,261 per sq ft.

“With that kind of money, you can construct a new 15-storey building, but not in the core zone of the Unesco heritage site, of course,” Choo said.

Property valuer Choo Ah Sit says the prices for heritage buildings have gone ‘crazy’ since Unesco recognised it in 2008.

Having observed the property market in Malacca for the last 33 years, Choo’s honest assessment of the market is, in his own words, “crazy”.

“The current trend now is, ‘You like, you pay. Don’t ask about the price’,” Choo declared.

From a map showing the Jalan Tun Tan Cheng Lock-Jalan Hang Jebat area (famously known as the Jonker Street area) and its immediate lanes, there are no less than 20 properties available for sale, but there are few signboards to indicate the owners’ intentions.

“In some cases, someone who has taken a fancy to a building will simply ask around for the owner’s contact. Surprisingly, word spreads fast. This is how some transactions are concluded,” revealed Choo.

The steep jump in prices, said Choo, came in tandem with the declaration of the area as a Unesco heritage site.

“From the 1970s to the 1990s, there was no interest in these buildings. One was because of the Rent Control Act that saw rental rates for buildings built before World War II being fixed at RM100 to RM200 per month. The returns were not enough to motivate owners to perform the necessary maintenance, resulting in some of these structures falling into a sorry state of disrepair. Only when the Act was abolished and the free market allowed to take over, did prices start to move upwards by anywhere between 30% and 50%,” Choo said.

For an idea of how much investors are expected to fork out at current market prices, Choo revealed that asking property prices in the heritage zone in Malacca can start from RM600psf to as high as RM1,600psf, depending on location factors such as accessibility and traffic flow.

Choo cites three interesting cases.

One property located along Jalan Tun Tan Cheng Lock made a record sale of RM1,221psf while prices for two single-storey shop houses in Jalan Hang Kasturi appreciated from RM980,000 to RM1.75mil in a short span of nine months.

Choo surmised this may be caused by the property changing hands over a short period of time. He also does not rule out factors such as speculation and the undervaluing of property.

. A pre-war shop with a restaurant for sale in Lorong Panglima, Ipoh, for RM1.5mil.

Another plum lot is a two-storey pre-war building occupying 1,717sq ft on Jalan Tun Tan Cheng Lock that is asking RM2.8mil or RM1,630psf.

“The high prices are mainly due to a fixed supply and it will keep rising because of this. Where foreign buyers are involved, it may have something to do with the prestige of owning a piece of property in a Unesco heritage site. The other thing is our favourable exchange rate,” said Choo of the dramatic prices.

Over in Penang’s Georgetown, which received the Unesco heritage designation at the same time as Malacca, Jennifer Yeoh, 47, a real estate agent for the past five years, said the appreciation for old buildings had been foreseen by some businessmen who transformed these premises into restaurants, hotels and retail outlets as early as a decade ago.

Case in point is Gurney Paragon on Gurney Drive. Standing together with the brand new mall is the 88-year-old St Joseph’s Novitiate.

In 2004, the 10-acre parcel of land was sold to Hunza Properties for RM97.86mil, or roughly RM250psf back then.

Today’s prices have, of course, risen significantly.

In Yeoh’s listings, for example, there is a row of seven units on Lebuh Clark each occupying 650sq ft going at RM1.2mil a unit or RM1,846psf. Over on Jalan Irving, a two-storey bungalow with a built-up area of 3,964sq ft is going for an asking price of RM4.5mil or RM1,135psf. On Beach Street (Lebuh Pantai), the owner of a two-storey shop house covering an area of 4,475sq ft has put the property up for sale at RM1,005psf.

“The trend is not to buy them singly but to purchase maybe a row of seven units at a time so that bigger commercial projects can take place,” says Yeoh.

She reckons buyers in this category are also antique appreciators in a way. In some of Yeoh’s listings, there is still old furniture from the post-World War II era inside.

Over in Ipoh, head of business development for Oriental Realty, Gladwin Agilan said the interest in pre-war and heritage buildings started in 2008 when a group of local businessmen began buying properties on Jalan Raja Ekram, Jalan Lau Ek Ching and Lorong Panglima and converting them into watering holes and eateries.

History, said Agilan, 37, was the main selling point. He cites Lorong Panglima as an example.

“In the past, this was known as Concubine Lane, formerly a red light area. Tin miners were said to keep their mistresses there, away from the public eye, in these very houses. Over time, international media and local historians played a part to stoke interest in the area.

With the influx of visitors who have found the architecture and nostalgia an ideal spot for wedding photography, local authorities were prompted to repair infrastructure like drainage and other utilities,” Agilan said.

Over 10 years, Agilan has seen property prices for pre-war buildings in Ipoh starting from as low as RM150,000 to RM180,000 and appreciating to a current price of RM550,000 to RM600,000.

“In our records, the last transaction for a pre-war building was at RM950,000. Today, offers have reached RM1.1mil,” he said.

In his current listings, a refurbished two-storey pre-war building measuring about 900sq ft on Panglima Lane is going for an asking price of RM800,000, which works out to an auspicious RM888psf.

The first floor is already tenanted, but the upper floor can be adapted into a homestay. Over in Jalan Lau Ek Ching, where the famed Bricks and Barrels watering hole is located, the current asking price for any one of the refurbished buildings covering 1,900sq ft on this row is RM2mil, about RM1,052psf.

Agilan explained the intention of most owners is not to restore but adaptive reuse. First on the agenda is the electrical rewiring, plumbing, roofing and flooring.

Walls are usually in the form of cement skreed and if the original floors are of timber, these will usually be replaced with double volume metal decks for safety and functionality. Renovation costs for such projects are usually in the range of RM100,000 to RM150,000.

According to Agilan, Ipoh is a veritable trove for heritage building hunters as there are no less than 2,000 units over 80 to 100 years old scattered in seven main areas.

However, Agilan reckons the chance to own a property in this market segment requires a lot of conviction.

“The owners really have a lot of holding power. There are cases where offers have had to wait between six months to a year before getting a reply. The oft-received response I always get from the owners is ‘Not now’ when it comes to the question of selling their property. Understandably so, as some of them are ancestral homes,” said Agilan.

But mindsets, observed Agilan, are slowly changing with the younger generation.

“In the 1980s, during the lull in tin prices, many moved to Kuala Lumpur. Back then, these properties had not reached their full worth yet as buyers did not know what to do with them.

“However, the economic revival in Ipoh has changed things and given people new ideas so this is a very good time to sell, and buy,” concluded Agilan.